Unit economics for e-commerce
In short
Unit economics asks one question: does one more customer leave you better off. It needs two numbers that most stores hold in different systems — what the customer cost to acquire, and what they are worth over the period you can plan for. Neither is knowable from inside an ad platform.
Every number in this cluster is one a finance team already recognises and a marketing dashboard usually cannot produce. That gap is the whole subject.
CAC against CLV, on a payback period rather than a session.
What this covers
- 01What actually gets subtracted before profitRead
- 02Whether a campaign made moneyRead
- 03How long until a customer pays back what they costRead
Every article in this cluster
Common questions
What is a good CAC to CLV ratio?
The ratio circulated most often is 1:3, and it is close to meaningless without a time horizon — a CLV measured over five years and one measured over twelve months describe different businesses. Fix the horizon first, then the ratio means something.
Should CAC include organic customers?
Blended CAC divides all acquisition spend by all new customers, including the ones you did not pay for. It flatters paid performance and is the right number for a board deck about the whole business. Paid CAC is the right number for a budget decision. Report both, labelled.
How far out should CLV be measured?
As far as you can plan and no further. A horizon longer than your purchasing cycle turns a measurement into a forecast, and a forecast is not what a budget decision needs.
See it on your data
Loyalz joins ad spend to settled order lines, so the numbers in these articles are columns rather than a spreadsheet you rebuild every month.
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